News of Sjahril's detention prompts rupiah to end weaker
News of Sjahril's detention prompts rupiah to end weaker
SINGAPORE (Dow Jones): Asian currencies were mixed late
Wednesday, with the Indonesian rupiah jolted as the latest twist
in the tussle between the country's central bank and the
government unfolds.
The rupiah, which was slightly firmer earlier in the day, was
pressured to the weaker end of its narrow trading band before
slowly losing more ground on news, late in the day, that central
bank Governor Sjahril Sabirin had been detained.
Indonesia's attorney general is detaining Sjahril for 20 days
at the attorney general's jailhouse to question him further on
his alleged involvement in the Bank Bali lending scandal. The
scandal centers around the illegal transfer of US$80 million from
Bank Bali last year to a company controlled by a senior official
of the then-ruling Golkar party.
The impact of the news on the rupiah is expected to be
limited, however, as market participants had already factored in
Sjahril being implicated in the Bank Bali scandal. Sjahril has
been resisting calls for him to step down after being named a
suspect in the scandal.
"If anything, this may be seen as negative news, but I don't
think it's that strong," said Steve Brice, strategist at Standard
Chartered Bank.
In late trading, the dollar was at Rp 8,645, up from Rp 8,623
late Tuesday. The rupiah was wedged within a thin trading band of
between Rp 8,570 and Rp 8,630 most of the day.
The currency was buoyed by reports Indonesian President
Abdurrahman Wahid plans to reshuffle his cabinet after a key
meeting in August of the country's highest legislative body.
Abdurrahman cited lack of cooperation among ministers as the
reason for the proposed reshuffle.
However, investors will likely remain averse to the rupiah
amid political uncertainty ahead of the People's Consultative
Assembly's meeting Aug. 12, analysts said.
"The political game is very much alive ahead of the August
parliament session, which will keep rupiah players on the edge
and prone to taking a defensive stance," said Syetarn Hasankul,
economist at WestLB Research.
Other Asian currencies remained clamped within thin trading
ranges after failing to breach key resistance levels recently,
dealers said.
"If technical resistance levels aren't breached, I don't see a
clear trend," a chief dealer at a European bank said.
Investors will remain relatively risk averse toward most Asian
currencies amid uncertainty over how much higher U.S. interest
rates will go and amid domestic political and economic
uncertainties in some Asian countries, dealers said.
The New Taiwan dollar, however, was boosted by a local media
report that quoted a central bank official as saying there is
upward pressure on the island's currency, dealers said. Dealers
said a report in the Economic Daily indicated that fresh inflows
of foreign equity funds in June will generate strong demand for
the New Taiwan dollar.
The U.S. dollar closed at NT$30.817, compared with the
previous close of NT$30.833.
The South Korean won ended barely changed against the U.S.
dollar Wednesday in quiet trading.
The dollar ended at 1,119.10 won, almost flat from Tuesday's
close at 1,119.20 won.
The Philippine peso skidded to a new 20-month low as banks
covered short dollar positions when corporate demand subsided,
dealers said.
The dollar closed at 42.83 pesos at the Philippine Dealing
System, its highest level since closing at 42.923 pesos on Oct.
20, 1998. The dollar closed Tuesday at 42.675 pesos.
Against the Singapore currency, the U.S. dollar took a
breather following its recent rally.
Dealers said there's insufficient buying momentum Wednesday to
hoist the U.S. dollar to the S$1.7350 upside target, which was
breached Tuesday.
The U.S. dollar was at S$1.7340, up from S$1.7328 late
Tuesday. The U.S. dollar had hit an intraday high of S$1.7355 in
Asian trading Tuesday, but retreated on profit-taking in U.S.
dollar positions by offshore participants.
Against the Thai currency, the dollar was at 39.175 baht, up
from 39.080 baht late Tuesday.